NEW DELHI: The recent big-bang reforms announced by the UPA government have indeed pepped up the mood of the global investor community for the Indian markets, research firm Kim Eng said on Friday.

In a report titled 'India market and economy near bottom', Kim Eng said, "Recently-announced courageous policy changes have stopped further deterioration of economy, and foreign institutional investors (FIIS) have stepped up equity purchases."

The Singapore-based research firm is of the view that India is likely to get preference in allocations. Institutional client sentiment is turning positive and a waning enthusiasm on China is also likely to shift allocations to India in the near term.

According to a report published in ET on Thursday, the US-based mutual fund Vanguard is expected to change its benchmark for its six international stock index products, which may eventually result in about $1.5 billion, or Rs 7,850 crore, flowing into Indian equities over the next few months.

Currently, India has 9.64% weightage on the FTSE Emerging Market Index, while it is 7.05% on the MSCI Emerging Market Index.

Foreign institutional investors (FIIs) have invested nearly $16.37 billion into Indian equities so far this year, the highest among all the emerging countries, resulting in a 22% rise in benchmark indices.

Kim Eng feels that the political scenarios is likely to weigh on the markets and recommends investors to stay with quality blue-chip stocks. Institutional interest is coming back to ICICI Bank following business restructuring that led to disciplined growth in the last 3 years.